Flexible payment is an ongoing payment relationship between two parties. It is a set of individual payment transactions over time, in return for a specified value of goods and services. One party is the seller of goods and services and the other is the buyer who pays for the goods and services.
If the money is paid in advance the buyer gets a reward with more goods and services when the goods and services are delivered.
If the seller supplies the goods and services in advance they get extra money for the same goods and services at the time the goods and services are received. The reward for early payment can be the same as the cost of late payment.
When a flexible payment is set up the value of money, rewards and goods and services exchanged is defined at the start of the flexible payment agreement. If, in any time period the exchange of goods and services does not meet the agreement the flexible payment is adjusted by altering the value of rewards in the remaining periods of the flexible payments. Linking many separate transactions with a flexible connected payment provides a single mechanism to provide the following services offered by traditional financial products.
In traditional finance, if the goods and services are money then the arrangement is called an annuity or allocated pension. If the supplier of goods and services supplies them in advance the arrangement is credit. If a person provides money in advance and expects more money back the arrangement is a financial investment. If a supplier gives repeat customers more goods and services the arrangement is a Reward like frequent flyer points or Everyday Rewards. Flexible payments provide all these services within one flexible payment agreement.
Flexible payments achieve multiple objectives because the past is linked to the future by adjusting the rewards. Combining all these services saves processing and administrative overheads and makes for a low-cost, private, secure, and transparent exchange of value over time. Flexible payments increase computation and communication of information but in the modern world, these costs are low.
Security is increased and costs are further decreased by buyers and sellers forming not-for-profit Cooperatives to sell goods and services. It is increased further if the Co-ops remain small. Competition and Collaboration increase if it is possible for members to choose to move, without penalty, between Cooperatives providing the same goods and services.
The excess value generated by economic activity in not-for-profit Co-ops is distributed with lower prices to members and increased rewards for investing to members who supply money. It creates a system where the dynamics of operation reduce prices while increasing quality and long term value of the goods and services supplied to buyers.
The combination of removing interest, increased collaboration and competition between Cooperatives result in further efficiencies. Economies of scale happen if the information systems used by Co-ops are compatible and allow the easy transfer of members between Co-ops.
In summary, traditional economics treat each transfer of money or payment as a separate independent transaction. To ensure the money retains its value the traditional financial system gives money time value or interest. Money earns more money because it exists, not because it is used. Alternatively, flexible payments protect the value of money by linking many payments of many entities in long term relationships between buyers and sellers. Investors get returns with more goods and services for the same cost.
With modern technology, the cost of flexible payments is low and they fit seamlessly into traditional economic systems. Flexible payments work with or without not-for-profit cooperatives and can be introduced incrementally and provide much needed economic competition to a financial system that rewards the renters of money at the expense of buyers and sellers.
